ACC201 Ashford University Mod 5 Financial Accounting Problem Set Paper

Two parts!

First you will complete the Milestone below…then you will login and complete the Module 5 Problem Set

Task: Submit to complete this assignmentIn this second milestone of your final project, you will move through the next phase of the accounting cycle by creating the trial balance, adjusted entries, and adjusted trial balance in your accounting Final Project Workbook.

 

 

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ACC 201 Milestone Two Guidelines and Rubric Overview: In this milestone, you will move through the next phase of the accounting cycle by creating the trial balance, adjusting entries, and adjusted trial balance. Completing the adjusting entries implements the matching, timing, and periodicity of the generally accepted accounting principles. Omission of this step will show a higher net income than there actually is, which could cause users of the financial statements to make an incorrect decision and suffer financially. Prompt: You will find the provided data for your second milestone in the appendix at the end of this document. The data have been separated from the prompt so that you can more easily view the full scope of this assignment. Links have been provided to help you locate the information. Specifically, the following critical elements must be addressed: I. II. Incorporate the feedback that you received from your Milestone One submission on Steps 1–4. A. Step One: Complete the “July Journal Entries” tab in your workbook using the Step One data in the appendix. B. Step Two: Complete the “August Journal Entries” tab in your workbook using the Step Two data in the appendix. C. Step Three: Complete the “September Journal Entries” tab in your workbook using the Step Three data and updated scenario information in the appendix. Note that there was an additional line of products added this month, so you must first complete the “Inventory Valuation” tab in your workbook and copy the journal entries from the inventory evaluation page into your journal for this month to ensure the impact of merchandising is reflected in your reporting. D. Step Four: Transfer posted entries to T accounts. Apply the accrual basis of accounting to correctly create adjusting entries in the preparation of financial statements: A. Step Five: Prepare the unadjusted trial balance. Note that you should use the T account balances completed in the previous step to prepare the unadjusted trial balance portion of the “Trial Balance” tab in your workbook. B. Step Six: Complete the “Adjusting Entries” tab in your workbook using the Step Six data in the appendix. Note that you should take the adjusting entries from this worksheet and enter them into the “Trial Balance” tab in your workbook. C. Step Seven: Apply adjusting entries to create the adjusted trial balance. Note that the adjusting entries from Step Six will apply to affected accounts in the unadjusted trial balance to arrive at the adjusted trial balance. Rubric Guidelines for Submission: Your completed accounting workbook should have all tabs fully and accurately populated in the provided Excel template. Critical Elements Incorporate the Feedback Evident (100%) Not Evident (0%) Fully incorporates feedback from Fails to incorporate feedback Milestone One on Steps 1–4 of from Milestone One on Steps 1– the workbook 4 of the workbook Value 25 Apply the Accrual Basis of Accounting: Step Five Prepares the unadjusted trial balance Does not prepare the unadjusted trial balance 25 Apply Accrual Basis of Prepares the adjusting entries Accounting: Step Six Does not prepare the adjusting entries 25 Apply Accrual Basis of Prepares the adjusted trial Accounting: Step balance Seven Does not prepare the adjusted trial balance 25 Total 100% Appendix: Workbook Data for Milestone Two Step One Data (Click on the link to return to the prompt.) The following events occur in July, 2018: July 1: You take $10,000 from your personal savings account and buy common stock in Peyton Approved. July 1: Purchase $6,500 in baking supplies from vendor, on account. July 3: Your parents lend the company $10,000 cash in exchange for a two-year, 6% note payable. Interest and the principal are repayable at maturity. July 7: Enter into a lease agreement for bakery space. The agreement is for 1 year. The rent is $1,500 per month, and the last month’s rent payment of $1,500 is required at time of lease agreement. The payment was made in cash. Lease period is effective July 1, 2018, through June 30, 2019. July 10: Pay $375 to the county for a business license. July 11: Purchase a cash register for $250 (deemed to be not material enough to qualify as depreciable equipment—use misc. exp.). July 13: You have baking equipment, including an oven and mixer, which you have been using for your home-based business and will now start using in the bakery. You estimate that the equipment is currently worth $6,000, and you transfer the equipment into the business in exchange for additional common stock. The equipment has a 5-year useful life. July 13: Pay $200 for business cards/flyers/posters/ads to use for advertising. July 14: Pay $300 for office supplies. July 15: Hire part-time helper to be paid $12 per hour. Pay periods are the 1st through the 15th and 16th through the end of the month, with paydays being the 20th for the first pay period and the 5th of the following month for the second pay period. (No entry is required on this date; it is here for informational purposes only.) July 30: Received telephone bill for July in amount of $75. Payment is due on August 10. July 31: Pay $2,400 for a 12-month insurance policy. Policy effective dates are August 1, 2018, through July 31, 2019. July 31: Accrue wages earned for employee for period of 16th through 31st of July (Wage calculations table provided below). July 31: Total July bakery sales were $15,000. $5,000 of these sales are on accounts receivable. Step Two Data (Click on the link to return to the prompt.) The following events occur in August, 2018: August 5: Paid employee for period ending 7/31. August 8: Receive payments from customers towards accounts receivable in amount of $3,800. August 10: Paid July telephone bill. August 15: Purchase additional baking supplies in amount of $5,000 from vendor, on account. August 15: Accrue wages earned for employee from period of 1st through 15th of August (Wage calculations table provided below). August 15: Pay rent on bakery space. August 18: Receive payments from customers towards accounts receivable in amount of $3,000. August 20: Paid $8,500 toward baking supplies vendor payable. August 20: Pay employee for period ending 8/15. August 22: $300 in office supplies purchased. August 31: Received telephone bill for August in amount of $75. Payment is due on September 10. August 31: Accrue wages earned for employee for period of August 16th through August 31st (Wage calculations table provided below). August 31: August bakery sales total $20,000. $7,500 of this total is on accounts receivable. Step Three (Click on the link to return to the prompt.) Updated Scenario: Many customers have been asking for more hypoallergenic products, so in September you start carrying a line of hypoallergenic shampoos on a trial basis. The following information relates to the purchase and sales of the shampoo:  You use the perpetual inventory method. You are uncertain as to which valuation method to use—FIFO, LIFO, or weighted average, so you calculate inventory using all three and then decide which one you would like to choose. Data: The following events occur in September, 2018: September 1: Paid dividends to self in amount of $10,000. September 5: Pay employee for period ending 8/31. September 7: Purchase merchandise for resale. See “Inventory Valuation” tab for details. September 8: Receive payments from customers toward accounts receivable in amount of $4,000. September 10: Pay August telephone bill. September 11: Purchase baking supplies in amount of $7,000 from vendor on account. September 13: Paid on supplies vendor account in amount of $5,000. September 15: Accrue employee wages for period of September 1 through September 15. September 15: Pay rent on bakery space: $1,500. September 15: Record merchandise sales transaction. See “Inventory Valuation” tab for details. September 15: Record impact of sales transaction on COGS and the inventory asset. See “Inventory Valuation” tab for details. September 20: Pay employee for period ending 9/15. September 20: Purchase merchandise inventory for resale to customers. See “Inventory Valuation” tab for details. September 24: Record sales of merchandise to customers. See “Inventory Valuation” tab for details. September 24: Record impact of sales transaction on COGS and the inventory asset. See “Inventory Valuation” tab for details. September 30: Purchase merchandise inventory for resale to customers. See “Inventory Valuation” tab for details. September 30: Accrue employee wages for period of September 16th through September 30th September 30: Total September bakery sales are $20,000. $6,000 of these sales are on accounts receivable. Step Six Data (Click on the link to return to the prompt.) On September 30, the following adjustments must be made:      [Note: This is a sample.] Depreciation of baking equipment transferred to company on 7/13. Assume a half month of depreciation in July using the straight-line method. Accrue interest for note payable. Assume a full month of interest for July. (6% annual interest on $10,000 loan from parents.) Record insurance used for the year. Actual baking supplies on-hand as of September 30 are $1,100. Office supplies on-hand as of September 30 are $50. Wage calculation data: Month 31 Jul. 15 Aug. 31 Aug. 15 Sep. 30 Sep. Hours 10 40 35 38 40 Rate 12 12 12 12 12 Pay 120 480 420 456 480 Print this page to use for your journal entries. Only accounts on this page can be used. Asset Accounts Acct # Cash Baking Supplies Prepaid Rent Prepaid Insurance Baking Equipment Office Supplies Accounts Receivable Accumulated Depreciation Merchandise Inventory 101 102 103 104 105 106 107 108 109 This chart of accounts should help you identify the appropriate accounts to record to as you are analyzing and journaling transactions for this workbook. There is nothing to complete on this page; this is simply a resource for you. ntries. Only accounts on this page can be used. Liability Accounts Equity Accounts Acct # Notes Payable Accounts Payable Wages Payable Interest Payable he appropriate accounts to record to as you are analyzing and is nothing to complete on this page; this is simply a resource for you. 201 Common Stock 202 Dividends 203 204 Revenue Accounts Bakery Sales Merchandise Sales Expense Accounts Baking Supplies Expense Rent Expense Insurance Expense Misc. Expense Business License Expense Advertising Expense Wages Expense Telephone Expense Interest Expense Depreciation Expense Office Supplies Expense Cost of Goods Sold s Acct # 301 302 ts Acct # 401 402 ts Acct # 501 502 503 504 505 506 507 508 509 510 511 512 Peyton Approved General Journal Entries Jul-18 Date Accounts 1-Jul Cash Common Stock Debit $$$ Total – – Put entries in shaded cells Credit $$$ – – Peyton Approved General Journal Entries Aug-18 Date Accounts Debit Total – Put entries in shaded cells Credit $ – Peyton Approved General Journal Entries Sep-18 Date Accounts Debit Credit Total – – Put entries in shaded cells FIFO USE THIS ONE FOR THE SEPTEMBER ENTRIES Date Purchases 7-Sep 10 $ 6.00 $ 60.00 15-Sep 20-Sep 20 $ 6.10 $ 25 $ 7-Sep 6.05 $ 151.25 $ 333.25 Purchases 10 $ 6.00 $ 24-Sep 6.10 $ 2 2 20 22 26 6.00 $ 6.10 $ $ $ 12.00 97.60 109.60 157.60 60.00 4 4 25 29 29 10 8 $ 20 $ 48.00 Sales 15-Sep 20-Sep 6.00 $ 122.00 2 $ 16 $ 55 LIFO 10 8 $ 24-Sep 30-Sep Sales 6.00 $ 48.00 122.00 2 2 20 22 18 $ 6.10 $ 109.80 2 2 4 30-Sep 25 $ 55 weighted average 7-Sep 6.05 $ 151.25 $ 333.25 Purchases 10 $ 6.00 $ 6.10 $ 10 55 48.00 6.05 $ 151.25 $ 333.25 2 2 20 22 18 $ 25 $ 6.00 $ 122.00 24-Sep 30-Sep 157.80 60.00 8 $ 20 $ $ Sales 15-Sep 20-Sep 26 2 2 25 29 29 26 6.09 $ 109.62 157.62 4 4 25 29 $ Ending Inventory 6.00 $ 60.00 $ 6.00 $ 12.00 $ $ 6.00 $ 6.10 $ $ 12.00 122.00 134.00 $ 6.10 $ 24.40 $ $ 6.10 $ 6.05 $ $ $ 24.40 151.25 175.65 175.65 Ending Inventory $ 6.00 $ 60.00 $ 6.00 $ 12.00 $ $ 6.00 $ 6.10 $ $ 12.00 122.00 134.00 $ $ 6.00 $ 6.10 $ $ 12.00 12.20 24.20 7-Sep Merchandise Inventory (10 x $6) Cash Purchased inventory Dr 60.00 15-Sep Cash (8 x $8.50) Merchandise Sales Record sale of inventory 68.00 15-Sep Cost of Goods Sold (8 X $6) Merchandise Inventory Recorded the cost of goods sold 48.00 20-Sep Merchandise Inventory (20 x $6.10 ) Cash 122.00 24-Sep Cash (18 x 8.50) Merchandise Sales Record sale of inventory 153.00 24-Sep Cost of Goods Sold (2 x $6)+(16 x $6.10) Merchandise Inventory Recorded the cost of goods sold 109.60 30-Sep Merchandise Inventory (25 x $6.05) Cash 151.25 7-Sep Merchandise Inventory (10 x $6) Cash Purchased inventory 60.00 15-Sep Cash (8 x $8.50) Merchandise Sales Record sale of inventory 68.00 15-Sep Cost of Goods Sold (8 X $6) Merchandise Inventory Record inventory reduction due to sale 48.00 20-Sep Merchandise Inventory (20 x $6.10) 122.00 $ $ $ 6.00 $ 6.10 $ 6.05 $ $ $ 12.00 12.20 151.25 175.45 175.45 Ending Inventory $ 6.00 $60 $ $ $ 6.00 $ 6.00 $ 6.10 $ $ $ $ $ 6.05 $ $ Cash 24-Sep Cash (18 x 8.50) Merchandise Sales Record sale of inventory 153.00 24-Sep Cost of Goods Sold (18 x $6.10) Merchandise Inventory Record inventory reduction due to sale 109.80 30-Sep Merchandise Inventory (25 x $6.05) Cash 151.25 7-Sep Merchandise Inventory (10 x $6) Cash Purchased inventory 60.00 12.00 12.00 122.00 per unit 134.00 $6.09 24.38 151.25 151.25 $5.22 15-Sep Cash (8 x $8.50) Merchandise Sales Record sale of inventory 68.00 15-Sep Cost of Goods Sold (8 X $6) Merchandise Inventory Record inventory reduction due to sale 48.00 20-Sep Merchandise Inventory (20 x $6.10) Cash 122.00 24-Sep Cash (18 x 8.50) Merchandise Sales Record sale of inventory 153.00 24-Sep Cost of Goods Sold (18 x $6.09) Merchandise Inventory Record inventory reduction due to sale 109.62 30-Sep Merchandise Inventory (25 x $6.05) Cash 151.25 Cr 60.00 68.00 48.00 122.00 153.00 109.60 151.25 60.00 68.00 48.00 Purchases 9/7: 10 bottles purchased at $6 9/20: 20 bottles purchased at $6.10 9/30 : 25 bottles purchased at $6.05 Sales – selling price, $8.50 a bottle 9/15: 8 bottles 9/24: 18 bottles 122.00 153.00 109.80 151.25 60.00 68.00 48.00 122.00 153.00 109.62 151.25 date Cash date date Notes Payable date 3-Jul 1-Jul 3-Jul 7-Jul 10-Jul 11-Jul 13-Jul 14-Jul 31-Jul – – Balance 31-Jul 5-Aug 8-Aug 10-Aug 18-Aug 15-Aug 20-Aug 20-Aug 22-Aug Accounts Rec. 31-Jul 8-Aug 18-Aug 31-Aug 1-Sep 5-Sep 7-Sep 31-Aug 8-Sep 30-Sep 8-Sep 10-Sep 13-Sep 15-Sep Balance – – 15-Sep 20-Sep 20-Sep 24-Sep 30-Sep 30-Sep Balance – – Misc. expense Baking equipment 11-Jul Balance 13-Jul – Balance – – Baking supplies Office supplies 1-Jul 15-Aug 11-Sep Balance 14-Jul 22-Aug – Balance Prepaid rent – Prepaid insurance 7-Jul Balance – 31-Jul – Balance Accounts payable – – Wages expense 1-Jul 30-Jul 10-Aug 15-Aug 20-Aug 31-Jul 15-Aug 31-Aug 15-Sep 30-Sep 31-Aug 10-Sep 11-Sep 13-Sep – – Balance Balance – – Dividends Telephone expense 1-Sep 30-Jul 31-Aug Balance Balance – – – – baking supplies expense misc supplies expense Merchandise Sales 15-Sep 24-Sep – – Balance Business License exp Common Stock 10-Jul Balance 1-Jul 13-Jul – – – Insurance expense Advertising expense 13-Jul Balance – – – Balance Rent expense 7-Jul 15-Aug 15-Sep Balance – – Bakery Sales 31-Jul 31-Aug 30-Sep – – Balance Wages payable 31-Jul 5-Aug 15-Aug 20-Aug 31-Aug 5-Sep 15-Sep 20-Sep 30-Sep – – Balance depreciation expense acc dep Interest expense COGS FIFO Interest payable 15-Sep 24-Sep Balance – – Merch. Inv. FIFO 7-Sep 15-Sep 20-Sep 24-Sep 30-Sep Balance – – Account Cash Baking Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Baking Equipment Accumulated Depreciation Office Supplies Accounts Receivable Notes Payable Interest Payable Accounts Payable Wages Payable Common Stock Dividends Bakery Sales Merchandise Sales Baking Supplies Expense Rent Expense Interest Expense Insurance Expense Depreciation Expense Misc. Expense Office Supplies Expense Business License Expense Advertising Expense Wages Expense Telephone Expense COGS (FIFO) Total: (FIFO) Peyton Approved Trial Balance 2018 Unadjusted trial balance Debit Credit – – – Approved Balance 018 Adjusting entries Debit Credit 250.00 250.00 250.00 250.00 Adjusted trial balance Debit Credit 250.00 250.00 250.00 250.00 Peyton Approved Adjusting Journal Entries 2018 Date Accounts 30-Sep Depreciation Expense accumulated depreciation Debit 250 Credit 250.00 30-Sep 30-Sep 30-Sep 30-Sep 250.00 250.00 Put entries in shaded cells Peyton Approved Income Statement For Qtr. Ending 9/30/2018 Revenues: Total Revenues Cost of Goods Sold Gross Profit (FIFO) – Operating Expenses: Total Operating Expenses: – Net Income (FIFO) – Peyton Approved Statement of Retained Earnings For Qtr. Ending 9/30/2018 Beginning Balance: plus Net Income (FIFO) less Dividends: Ending Balance (FIFO): – – Peyton Approved Balance Sheet As of September 30, 2018 Assets Current Assets: Total Current Assets – Long-Term/Fixed Assets: Less Accumulated Depreciation Total Long-Term/Fixed Assets Total Assets: – – Peyton Approved Balance Sheet As of September 30, 2018 Liabilities and Owners’ Equity Current Liabilities: Total Current Liabilities – Long-Term Liabilities: Total Long-Term Liabilities: – Total Liabilities: – Equity: Total Equity – Total Liabilities & Equity – Peyton Approved Closing Entries Qtr ending 9/30/2018 Date Accounts 30-Sep Bakery Sales Merchandise Sales Income Summary 30-Sep Income Summary (FIFO) Baking Supplies Expense Rent Expense Wages Expense Office Supplies Expense Business License Expense Misc. Expense Depreciation Expense Insurance Expense Advertising Expense Interest Expense Telephone Expense COGS FIFO 30-Sep Income Summary (FIFO) Retained Earnings FIFO 30-Sep Retained Earnings Dividends Debit Credit Peyton Approved Post Closing Trial Balance Qtr. Ending 9/30/2018 Account Unadjusted Trial Balance Debit Cash Baking Supplies Merchandise Inventory (FIFO) Prepaid Rent Prepaid Insurance Baking Equipment Accumulated Depreciation Office Supplies Accounts Receivable Accounts Payable Wages Payable Interest Payable Notes Payable Common Stock Retained Earnings FIFO Totals – adjusted Trial Balance Credit – Peyton Approved Reversing Entries Qtr ending 9/30/2018 Date Accounts 30-Sep Interest Payable Interest Expense Debit 150.00 These are given to you. No other entries are needed. Credit 150.00 …